US Trade War Against BRICS: A Misguided Move That Could Harm Global Influence

Strategic Insights -

The US is embarking on a trade war against the BRICS nations, with President Donald Trump announcing a 10% tariff on any country aligning with the anti-American policies of BRICS. This escalation of tensions could have profound consequences for US trade policy and global influence, including a weakening of the US economy and a strengthening of Russia's position in the global market. Despite Trump's frustrations with the anti-Western policies of BRICS member states, a trade war is unlikely to achieve its intended goals and could ultimately harm the US.

Key Takeaways:

  • The US's new tariffs on BRICS members and partners will not severely weaken the economies of Russia and Iran, as they can rely on intra-BRICS trade to fill supply chain gaps.
  • Higher prices on goods supplied by BRICS members and partners will accelerate Russia's domestic production targets, helping the country reduce its GDP share allotted to imports to 17% by 2030.
  • The tariffs will have a negligible impact on the Iranian economy, but may convince Russia and China to deepen their economic ties with Iran and give new momentum to India's May 2024 deal to operate the Iranian port of Chabahar.
  • The new tariffs could undo positive steps towards a de-escalation of trade tensions between the US and China, stalling further trade talks and reigniting industrial supply chain bottlenecks.
  • The US's bilateral trade ties with key partners will be upended, and its global image will suffer as a result of the trade war.
  • BRICS countries are expanding the Contingent Reserve Arrangement (CRA) to dilute the US dollar's dominance, and the new tariffs will intensify discussions about de-dollarisation.
  • Chinese President Xi Jinping's crusade against "unilateral bullying" could gain momentum, with the US trade war providing a strong argument to form an anti-tariff coalition.

Statistics:

  • Russian trade volumes with China reached $244.8 billion in 2022, and trade volumes with India reached $70.6 billion.
  • Russia's GDP share allotted to imports is expected to reduce to 17% by 2030.
  • India's May 2024 deal to operate the Iranian port of Chabahar could provide a new momentum for economic ties between India and Iran.
  • The US's tariffs on BRICS members and partners will add an additional 10% tax on imports.

Sources:

  • Truth Social post by President Donald Trump
  • Putin has urged Russia to reduce its GDP share allotted to imports to 17% by 2030
  • Russia's Transfer of Financial Messages (SPFS) and China's Cross-border Interbank Payment System (CIPS) are incrementally diluting SWIFT dominance
  • Chinese President Xi Jinping's crusade against "unilateral bullying"